Assume the negligence rule holds. Show that the second-best optimal due care level a nr (y) is

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Assume the negligence rule holds. Show that the second-best optimal due care level a^nr(y) is given by:

(a) a^nr(y)=a^*for y≥y̆

(b) a^nr(y)=ā(y) for y

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A Course In Environmental Economics

ISBN: 9781316866818

1st Edition

Authors: Daniel J Phaneuf, Till Requate

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Question Posted: Feb 15, 2024 08:01 AM

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Assume the negligence rule holds. Show that the second-best optimal due care level a nr (y) is

Question:

[1-p(as (y))]U (y-a" (y)) = U (y (y))

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The question concerns the optimal due care level under a negligence rule framework specifically in the context of law and economics The negligence rul...View the full answer

A Course In Environmental Economics

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